Newspaper delivery has been causing
News Ltd
’s managing director of group newspapers and digital products,
Jerry Harris
, grief for some years.

Three years ago, when Harris was the head of News Queensland – in charge of the Courier Mail and Sunday Mail, he could not get his local newsagent to deliver his own papers to his Samford Valley house, north-west of Brisbane.

The area – full of grassy, acreage properties – was a newsagent’s nightmare, impossible to service profitably. News had to bring in a contractor to plug in gaps in the run, which included Harris’s house.

It is symptomatic of the problems with print distribution Harris has been assigned to fix by News chief executive Kim Williams.

A solution to the tattered state of much newspaper distribution has become increasingly urgent as the split in Rupert Murdoch’s empire approaches later in the year – the highly profitable film and TV businesses will be removed, leaving the Australian paper business, and any structural problems such as this, far more exposed.

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The proposed solution to newspaper distribution has become less clear following the abandonment of News’s ambitious plan – dubbed T2020 – to reorganise its newspaper distribution business, beginning with a trial site in south Queensland.

The scheme was to make sure people could get a paper reliably delivered to their homes and that the person – or business – that delivered it made a buck from the service. The key to process was scale. The size of the monopoly areas given to newspaper distributors was to grow by about 15 times their national average to 10,000 papers a day.

“I was surprised," said head of the Queensland Newsagents Federation, Ann Nugent, of the decision to abort the trial on March 6. Ms Nugent recognised the need to increase the size of newspaper distribution runs, but had been critical of the decision to make 10,000 papers the uniform size of a run, whatever the area.

The director of retail circulation at News, Catrin Thomas, said the T2020 process had been abandoned because it was “too slow" and the tender lacked “competitive tension".

But she said its guiding principles remained: that the newspaper retail business should be separated from newspaper distribution; that the size of newspaper distribution runs should be greatly increased; and that whoever distributes newspapers should be properly paid for the service, with differences in runs taken into account.

The fee for throwing a paper in sparsely populated rural NSW should be higher than in inner-city Sydney – not currently the case.

Ms Thomas said T2020’s regimented approach would be replaced with a more “flexible" model. Newsagents nationally have been invited to submit proposals to News to increase their distribution runs.

The head of the Australian Newsagents’ Federation, Alf Maccioni, said News had learned a number of lessons from the abandoned trial: “That one size does not fit all. That the delivery of newspapers costs more than they had expected. And, I think they were surprised by how few people put their hands up to be agents."

One of the few who did was Graham Bunyon, owner of Palmdale News, in Brisbane’s south-east. Mr Bunyon said the process to tender for a 10,000 paper run had been “mega-complicated", but he thought it made sense commercially.

“Obviously there’s money to be made in it," he said. Over the past eight months he has increased the size of his distribution run from about 1500 papers a day to more than 4000 by taking over the runs of three other newsagents. He was keen to grow further and wasn’t clear why his proposal had been rejected.

Sources familiar with the process, who asked not to be named because of their professional relationship with the publisher, said News had been surprised by the cost of tenders. “What News wanted was a Rolls-Royce system for a Holden price," one source said.

Ms Thomas said some of the tender bids had not been high enough and the main problem had been the slowness of the process, rather than the cost. She said distribution to loyal readers in sparsely populated areas remained a challenge. “How can we deliver it to them profitably? We’re still working that out," she said.

Mark Fletcher, a respected voice in the industry, who owns news agencies in Victoria and publishes the Australian Newsagency Blog, said while the T2020 name had been shelved, the rationalisation of newspaper distribution would continue.

“This is a fundamental business issue that has to be resolved," Mr Fletcher said.

He said its success would depend on clear communication with newsagents, something he said that News had not always excelled at.